Exposed from the 10th of the Month: When the Next Paycheck Finances the Current Month

Bank Overdrafts: A Double-Edged Solution for Employees Facing Financial Pressure

Bank overdrafts are intended to cushion unexpected expenses. However, for many employees, they have become a necessary tool to survive until the end of the month.

When relied upon repeatedly, this short-term financing can accumulate to cost hundreds of dirhams annually. By the 10th of the month, many accounts are already in the red. To make ends meet until payday, employees can draw on a financial reserve authorized by their banks; alas, this "reserve" is not free—it’s the overdraft.

This financial mechanism addresses a genuine need, bridging the gap between monthly expenditures and the single paycheck received once a month. The trouble arises when overdrafts start to become a regular part of the budget. Subsequent salaries may then be used, at least in part, to cover deficits from the previous month.

11.2 Billion Dirhams in Cash Credit

The scope of this issue is captured in monetary statistics. By the end of September 2026, the total outstanding balance for overdrafts and cash credit extended to individuals and Moroccans living abroad (MRE) reached 11.2 billion dirhams, a significant increase from 9.5 billion dirhams the previous year. This marks a year-on-year growth of 17.9%.

This rise is nearly four times greater than that of mortgage loans, which saw a modest increase of 4.5% over the same period, and notably higher than the 5.2% growth in consumer credit. Cash financing is thus outpacing loans meant for housing or purchases.

A Subtle Yet Accumulative Cost

The cost of an overdraft depends on the amount utilized, its duration, and the terms outlined in the bank agreement. Currently, the maximum interest rate for conventional overdrafts is set at 13.21%. However, this cap does not mean that all banks charge this rate to all their customers.

For example, consider an overdraft of 5,000 dirhams maintained for twenty days. At the maximum rate, the interest could reach approximately 36 dirhams. While this might seem minor at first glance, when repeated every month, it amounts to a considerable sum. An overdraft of 5,000 dirhams for twenty days could equate to nearly 435 dirhams in annual interest, not including any additional fees outlined in the contract.

Salary Already Committed

This is where the mechanism becomes constraining. When a salary is deposited into an already overdrawn account of 3,000 or 5,000 dirhams, the funds are immediately consumed. Before rent, bills, or daily expenses even come into play, the available income for the new month is already reduced.

Thus, the overdraft no longer addresses a mere timing issue; it reveals a more pervasive imbalance between monthly expenses and income levels. The challenge shifts from financing an unexpected purchase to managing a month’s living expenses with a salary that has a portion already pre-allocated.

Public statistics do not provide insights into how many households regularly operate in overdraft, nor how many days their accounts remain overdrawn. However, the 17.9% increase in outstanding balances for individuals and MREs indicates that cash flow is becoming an increasingly sought-after source of financing.

For those living this reality, the conclusion is simple: an overdraft is essentially a cash advance on one’s salary. When it becomes a monthly occurrence, it diminishes the financial flexibility for the following month.